THE MAJOR EVENTS :: Business and Management Studies

THE MAJOR EVENTSThe graphs below summarise the fluctuations in the treat footing andshareholders returns of Vodafone group, as a result of two majorevents which occurred in middle February, 2004 and mid November of thesame year. On the 22nd 0f January 2004, AT&T Wireless, the leash largest mobilephone group in the US, put itself up for exchange but as shown above in public figure1, this does non seem to realize affected the share price or volume oftrading as there was no significant upward or downward prune in thesetwo areas. This can lead to an assumption that the market is wasteful as it did not respond to the information or that investorswere not expecting Vodafone to maneuver for AT&T Wireless because Mr Sarinhad told investors and analysts that he was happy with Vodafones crossroads venture with Verizon, the leading mobile phone operator in theUS.Had Vodafone succeeded in acquiring AT&T Wireless, it would have hadto sell its profitable guess in Verizon back to its part ner, VerizonCommunications - a prospect that did not draw to its shareholdersand so may be why the new information was not relevant to theVodafone.9th February 2004, saw the Vodafone Group Plc announcing that it will gallop to monitor developments in the US market and is exploringwhether a potential transaction with AT&T Wireless is in the interestsof its shareholders. This lead to a decrease in share price asinvestors knew that it would mean that Vodafone would have to sell itsprofitable send Verizon to buy AT&T Wireless. The steep drop in Fig 1suggests that the market was efficient in its reaction to thisannouncement.The formal play war began on the 13th when Cingular do an initial r distributively out of $30bn, and the offer was matched by Vodafone. Cingular thenraised its bid to $35bn which was again matched by the Britishcompany. When Cingular raised its offer to $38bn, Vodafone once morematched the bid and this suggested to investors that Vodafone wouldpay in like manner m uch for AT&T Wireless, which is why the share price droppedeach day till bidding ended on the seventeenth. On 17th February 2004,Vodafone withdrew from the auction when it concluded that it was nolonger in its shareholders best interests to continue discussions.We can see that there was a 5% increase in the share price when thiswas announced, and the volume of trading shows the marketsinformational efficiency Since news emerged that Cingular had made aninformal offer in mid-January, Vodafones shares have underperformedthe rest of the market, cutting the set of the company by more than